Data from multiple sources indicate healthy trends at Shopify ($SHOP) merchants in the first quarter, according to RBC Capital analysts, who reiterated an Outperform rating and $65 price target on the stock.
They told investors in a research note Monday that data indicates healthy growth in Shopify's merchants, better than seasonal web traffic to Shopify's top 1,000 merchants, and adoption of new services.
"BuiltWith: Shopify's total merchants up 5% sequentially," the analysts wrote.
"Our analysis of BuiltWith data indicates that merchants on Shopify rose 5% sequentially in Q1 (+8% Y/Y), the second consecutive quarter of net adds (+4% Y/Y Q4). Shopify's Q1 merchant growth suggests continued share gains against peers, which were down 7% Q/Q. Uptake of Buy with Prime at Shopify merchants was effectively flat in Q1 and represents an immaterial portion of Shopify's install base (just 0.01% of total)."
They believe the data shows consumer spending at Shopify merchants in Q1 was more resilient than generally expected, which could lead to MRR and GMV growth above estimates, while web traffic to Shopify websites is up 24% year-over-year.
"Sequential jump in Plus merchants suggests upside to MRR," analysts stated.
"Shopify Plus websites tracked by BuiltWith increased 53% Q/Q. The sequential jump in Shopify Plus merchants relative to total merchants suggests that Q1 MRR growth may exceed our outlook for just 2% Q/Q."
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